Catherine de Medici wants to purchase some of your nitre stockpile. Her initial proposal is to buy 5.5 tonnes at a price of 10 livre tournois. Your spies have determined that for every 0.2 livre reduction in price that she would purchase 0.3 more tonnes of nitre. How much should you charge in order to maximize the revenue of this sale?

Catherine de Medici wants to purchase some of your nitre stockpile. Her initial proposal is to buy 5.5 tonnes at a price of 10 livre tournois. Your spies have determined that for every 0.2 livre reduction in price that she would purchase 0.3 more tonnes of nitre. How much should you charge in order to maximize the revenue of this sale?

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 12CQ

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